Biodiversity metrics and biodiversity values for the public appraisal of biodiversity: synthesising and extending the evidence.
Lead Research Organisation:
UNIVERSITY OF EXETER
Department Name: Economics
Abstract
The world is facing a biodiversity crisis. Despite biodiversity's value, it is systematically ignored in economic decision making. This proposal will address this shortcoming by synthesising the lessons to date in valuing biodiversity, and establishing how these values can be mainstreamed in decision-making to positively affect biodiversity policy and outcomes. As numerous publications highlight, biodiversity contributes to people's wellbeing through multiple ecosystem services (e.g. pollination, climate regulation, flood prevention). Decades of research allows us to accurately estimate the relationship between land-use decisions and both biodiversity outcomes and ecosystem service values. Yet, people also derive well-being from simply knowing that biodiversity is there ("existence value"). This study will explore the two methods for incorporating these values within economic decision making: 1) via measuring people's Willingness-To-Pay (WTP) for biodiversity; 2) via the cost of meeting an agreed policy target (e.g. net-gain) for biodiversity: a cost-based approach.
The proposal will first critically review and synthesise the WTP approach. If consistent estimates of WTP exist, it is the economist's preferred approach - as it allows for the optimal allocation of resources across biodiversity outcomes and other goods (e.g. health, education) by weighing benefits against costs. However, there are well known inconsistencies in WTP estimates (e.g. WTP is unresponsive to increases in biodiversity provision, and is sensitive to framing), which arise because people struggle to interpret biodiversity-money trade-offs. We will therefore review how an alternative valuation procedure - the cost-based approach - could be operationalised.
In the UK the target in the 25-year Environment Plan is "nature-positive" or biodiversity net-gain. This can be used as the target for a cost-based approach. While the aim is clearly articulated, the net-gain ambition does not state which metric of biodiversity should be used to measure whether net-gain is achieved. This is problematic given biodiversity is multifaceted, and people's well-being is differently affected by different aspects. Orienting the cost-based approach around a biodiversity metric that reflects public preferences (what the public want in relation to biodiversity) requires establishing how well-being is affected by different aspects of biodiversity and how these tally with different metrics of biodiversity.
To achieve this aim, we shall synthesise the different metrics of biodiversity. We will couple this with an economic experiment specifically designed to tease apart the relationships between biodiversity metrics and people's preferences, and conduct this experiment with a representative sample to provide empirical evidence of which aspects of biodiversity people value, while avoiding asking them to perform difficult and controversial biodiversity-money trade-offs. Once an appropriate metric is established to assess achieving net-gain, the proposal will determine the cost meeting the target though the NEV modelling suite. This implied monetary value of biodiversity would then be used in policy appraisal and guide decisions away from harmful biodiversity impacts. Finally, the research will use the NEV modelling to demonstrate the land-use, welfare and biodiversity, implications of different policy approaches.
The research agenda is extremely timely given the recommendations of HMT's Dasgupta Review on the Economics of Biodiversity. It will have obvious ramifications for other metric-driven approaches (e.g. disclosure in the financial sector and the net-gain requirement for housing developments). Moreover, the research will act as a proof-of-principle for how biodiversity's value can be estimated and applied in policy appraisal, which will be of use globally given the reputation of the UK government guidelines on public investment appraisal that this research hopes to influence.
The proposal will first critically review and synthesise the WTP approach. If consistent estimates of WTP exist, it is the economist's preferred approach - as it allows for the optimal allocation of resources across biodiversity outcomes and other goods (e.g. health, education) by weighing benefits against costs. However, there are well known inconsistencies in WTP estimates (e.g. WTP is unresponsive to increases in biodiversity provision, and is sensitive to framing), which arise because people struggle to interpret biodiversity-money trade-offs. We will therefore review how an alternative valuation procedure - the cost-based approach - could be operationalised.
In the UK the target in the 25-year Environment Plan is "nature-positive" or biodiversity net-gain. This can be used as the target for a cost-based approach. While the aim is clearly articulated, the net-gain ambition does not state which metric of biodiversity should be used to measure whether net-gain is achieved. This is problematic given biodiversity is multifaceted, and people's well-being is differently affected by different aspects. Orienting the cost-based approach around a biodiversity metric that reflects public preferences (what the public want in relation to biodiversity) requires establishing how well-being is affected by different aspects of biodiversity and how these tally with different metrics of biodiversity.
To achieve this aim, we shall synthesise the different metrics of biodiversity. We will couple this with an economic experiment specifically designed to tease apart the relationships between biodiversity metrics and people's preferences, and conduct this experiment with a representative sample to provide empirical evidence of which aspects of biodiversity people value, while avoiding asking them to perform difficult and controversial biodiversity-money trade-offs. Once an appropriate metric is established to assess achieving net-gain, the proposal will determine the cost meeting the target though the NEV modelling suite. This implied monetary value of biodiversity would then be used in policy appraisal and guide decisions away from harmful biodiversity impacts. Finally, the research will use the NEV modelling to demonstrate the land-use, welfare and biodiversity, implications of different policy approaches.
The research agenda is extremely timely given the recommendations of HMT's Dasgupta Review on the Economics of Biodiversity. It will have obvious ramifications for other metric-driven approaches (e.g. disclosure in the financial sector and the net-gain requirement for housing developments). Moreover, the research will act as a proof-of-principle for how biodiversity's value can be estimated and applied in policy appraisal, which will be of use globally given the reputation of the UK government guidelines on public investment appraisal that this research hopes to influence.
Publications
Balmford A
(2023)
The value of impermanent carbon credits
Tedersoo L
(2023)
Towards a co-crediting system for carbon and biodiversity
in PLANTS, PEOPLE, PLANET
Description | We have understood that the key aspects of biodiversity that people prefer in a conservation and non-use context are, in order of sensitivity: extinction risk, species number and genetic diversity/distinctiveness. We have found in subsequent research that financial decision makers have very similar preferences. We are now in the process of obtaining an expert survey. |
Exploitation Route | It provides evidence on what people prefer about biodiversity and therefore can be used to inform the metric for the government's biodiversity net gain strategy implementation. |
Sectors | Agriculture Food and Drink Environment Financial Services and Management Consultancy Government Democracy and Justice Manufacturing including Industrial Biotechology |
Description | The work has been presented to many non-academic audiences. Difficult to say what the impact has been however. |
First Year Of Impact | 2023 |
Sector | Financial Services, and Management Consultancy,Government, Democracy and Justice |
Impact Types | Policy & public services |
Description | Biodiversity in ESG |
Amount | £133,650 (GBP) |
Funding ID | NE/X016560/1 |
Organisation | Natural Environment Research Council |
Sector | Public |
Country | United Kingdom |
Start | 01/2023 |
End | 01/2024 |
Description | Biodiversity Preference Experiments |
Organisation | University of Oxford |
Department | Department of Zoology |
Country | United Kingdom |
Sector | Academic/University |
PI Contribution | We undertook experiments on biodiversity with the Oxford Biology department as an expert sample. |
Collaborator Contribution | Time completing the experiment and providing feedback in a workshop session. |
Impact | We have data on expert elicitations of preferences for biodiveristy. |
Start Year | 2023 |
Description | HM Treasury Biodiversity Working Group |
Organisation | HM Treasury |
Country | United Kingdom |
Sector | Public |
PI Contribution | The biodiversity working group is working on introducing guidance on the value of biodiversity using a cost based approach to valuation. This is precisely what WP1 of BIOADD is trying to, and we are using metrics influenced by the work of the NERC Synthesis project. We have provided the input for the potential guidance and coordinated the working group |
Collaborator Contribution | HMT have hosted the working group and are drafting the guidance. |
Impact | Guidance is being drafted for the Green Book |
Start Year | 2021 |
Description | Kew Gardens Carbon Biodiversity collaboration |
Organisation | Royal Botanic Gardens, Kew |
Country | United Kingdom |
Sector | Charity/Non Profit |
PI Contribution | Frank Venmans and Ben Groom have contributed to a paper coauthored with Alex Antonelli and other academics. |
Collaborator Contribution | We have an academic paper together which looks at how to combine biodiversity with carbon credits using eDNA. |
Impact | An academic paper submitted to the journal Plants, People, Planet. |
Start Year | 2022 |
Description | BIOECON Conference Santiago de Compostela, Spain |
Form Of Engagement Activity | Participation in an activity, workshop or similar |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | I presented a paper entitled "Biodiversity metrics, public preferences, and the cost-based approach" with other members of the BIOADD and Synthesis projects as coauthors. The purpose of presenting was to get feedback on the paper from the scientific community and to prepare the piece for publication. |
Year(s) Of Engagement Activity | 2023 |
URL | https://dragonchair.org.uk/24th-bioecon-conference-on-the-theme-of-biodiversity-and-the-sustainable-... |
Description | Bank of France |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Policymakers/politicians |
Results and Impact | Key note to the Bank of France on Biodiversity at an international workshop |
Year(s) Of Engagement Activity | 2022 |
URL | https://www.banque-france.fr/en/frontiers-climate-and-nature-macroeconomics-and-finance |
Description | Dragon Capital - ISPONRE conference on natural capital valuation |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Industry/Business |
Results and Impact | ISPONRE is the Vietnamese Governments environmental ministry research group in environmental economics. Ben Groom as the keynote and provided an overview of the economic value of biodiversity. |
Year(s) Of Engagement Activity | 2022 |
URL | https://www.dragoncapital.com/dragon-capital-vietnam-helps-research-ca-mau-mangroves-and-pu-mat-nati... |
Description | EnvEcon: The annual conference of the UK Network of Environmental Economists (UKNEE) |
Form Of Engagement Activity | Participation in an activity, workshop or similar |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | The presentation was entitled "Aligning Biodiversity Metrics with Public Preferences for Environmental Policy" with Ben Balmford and Sarah Meier who both work on the BIOADD, BIOESG and Synthesis project work. the conference was at the Royal Society and was attended by private sector, government and the scientific communities. Spoke to representatives from DEFRA and the Big Biodiversity fund which is run by Federated Hermes. |
Year(s) Of Engagement Activity | 2024 |
URL | https://www.uknee.org.uk/envecon-2024 |
Description | Jefferies |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Industry/Business |
Results and Impact | Keynote speaker at a conference jointly organised between Jefferies, Exeter University and Dragon Capital. "Birds, Bears, Bulls" Biodiversity and Finance, Royal Chemistry Society, October 2023 |
Year(s) Of Engagement Activity | 2022,2023 |
Description | Keynote at the OECD-INSPIRE workshop: Assessing biodiversity-related risks, impacts and dependencies in the financial sector |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Policymakers/politicians |
Results and Impact | International workshop held in Paris discussing how to document and evaluate nature based risks in the financial sector (broadly defined) |
Year(s) Of Engagement Activity | 2023 |
URL | https://www.oecd.org/environment/resources/biodiversity/oecd-inspireworkshopassessingbiodiversity-re... |
Description | Plenary Speaker: Global Conference on Environmental Taxation (CGET, Paris), Sept 2023 |
Form Of Engagement Activity | A formal working group, expert panel or dialogue |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | Panel member discussing the value of temporary carbon sequestration and nature based solutions to climate change. Invited by teh |
Year(s) Of Engagement Activity | 2023 |
URL | https://www.gcet24.fr/_files/ugd/ea0ee2_0b8c86bea0e5413681fbf1491f6014ee.pdf |
Description | Society of Benefit Cost Analysis: Annual conference, Keynote, Milan. |
Form Of Engagement Activity | A talk or presentation |
Part Of Official Scheme? | No |
Geographic Reach | International |
Primary Audience | Professional Practitioners |
Results and Impact | I was invited to be the Keynote speaker at the annual conference. My presentation was entitled "The Long-term Value of Nature and Nature-based solutions: Three proposals for CBA practice". The presentation drew from work undertaken as part of our submission to the US OMB public consultation for their Cost Benefit Analysis guidelines, together with work on raising environmental prices over time due to scarcity and income growth. It also drew from our work in WP1 of the BIOADD project. |
Year(s) Of Engagement Activity | 2023 |
URL | https://www.benefitcostanalysis.org/european-conference-2023 |